At a March 25 press conference in Boston, the head of the U.S. Department of Education said that there was evidence of fraud at 91 separate campuses linked to Corinthian Colleges. When the for-profit operator of those schools closed in 2014, it had 70,000 students, and it was estimated that 350,000 attended the schools since 2010. The company allegedly recruited homeless students and advertised nonexistent programs in an effort to lure students to its schools.
The announcement made at the press conference was intended to help students find relief for outstanding student loan debts. However, the Department of Education is still collecting federal loan payments from students who went to a school associated with Corinthian. Students must apply individually for relief by filling out a series of forms. However, there are some who would like to see the process streamlined and made easier for those who still owe money to the government.
A group called Debt Collective has asked that authorities pursue those who invested in the schools as opposed to those who were defrauded. In California, the company was ordered to pay $1.1 billion in damages of which $800 million would go to students. However, as the company is in bankruptcy, the odds of this happening are slim.
Although most government-backed student loans are not discharged in a Chapter 7 bankruptcy there is often an exception for people who can successfully assert that repayment of those debts would cause an undue hardship. Bankruptcy lawyers can describe this process in more detail when outlining the eligibility and other requirements associated with that chapter.